Abstract
Although econometric models have been widely used to measure the impact of climate change on agriculture, there exist differences among the modelers on which specification should be preferred. To help explain the discrepancies, this paper assesses four different econometric models, i.e. OLS, panel, and two spatial models using a South American agricultural household data. The relationship among the econometric specifications is examined in terms of the freedom given to a spatial autoregressive parameter. In spatial models, the spatial parameter is free within the model, but is fixed a priori in the aspatial models. Empirical results show a high correlation of the land values across South America. Spatial models result in somewhat lower climate change impact estimates than those from the aspatial models.
Highlights
Econometric models that do not address this spatial nature will result in biased climate parameter estimates because they wrongly assign the difference in land values resulting from spatial dependence to that from climate variation (Anselin, 1988; Dubin, 1988; Benirschka and Binkley, 1994; Olmo, 1995)
Econometric methods have been widely used over the past decades to measure the impact of climate change on agriculture, there is little agreement among the modelers on which specification should be preferred
This paper emphasizes the need to model spatial dependence explicitly when researchers rely on cross-sectional net revenues or land values
Summary
Econometric models have been widely used to measure the impact of climate change on agriculture in the United States and around the world (Mendelsohn, Nordhaus, and Shaw, 1994, 1996; Kumar and Parikh, 2001; Reinsborough, 2001; Timmins, 2005; Seo, Mendelsohn, and Munasinghe, 2005; Schlenker, Hanemann, and Fisher, 2005; Kurukulasuriya et al, 2006; Deschenes and Greenstone, 2007; Seo and Mendelsohn, 2008a). Econometric models that do not address this spatial nature will result in biased climate parameter estimates because they wrongly assign the difference in land values resulting from spatial dependence to that from climate variation (Anselin, 1988; Dubin, 1988; Benirschka and Binkley, 1994; Olmo, 1995). With these points in mind, this paper assesses past econometric models in terms of their accounting of spatial dependence in land values. The paper tests whether the damage estimate would depend upon the capacity to adapt (Kelly, Kolstad, and Mitchell, 2005)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
